MAG7 Overinvestment in CapEx May Erode Future Returns

about 1 month ago

Kai Wu

"The impact of that will be in about three years' time that their return on invested capital is probably half where it is now as a result of those depreciation and amortization hitting the financial statements."

The dialogue warns that the heavy CapEx spending by leading MAG7 stocks—across companies like Meta, Google, and others—could lead to a significant erosion in future returns. As these companies invest heavily in physical and intangible assets to maintain competitive advantages, the subsequent depreciation may compress their ROIC over the coming years, signaling potential risks for investors.